What Are Catastrophic Health Insurance Plans?

Catastrophic health insurance plans are one of many options available to consumers who need insurance. But just like any insurance plan, there are pros and cons and eligibility requirements. Read on to learn more about this specific type of insurance plan and learn what to consider before committing to coverage under one.

Why a Catastrophic Health Insurance Plan?

With so many health insurance options available to you today, it can be challenging to choose the best one based on your needs, the criteria, and the cost. Therefore it is important to do your research and find out what each offers based on what you are paying, whether it be in your monthly premiums or your deductibles. 

Catastrophic health insurance plans have their pros and cons, like any health insurance plans available today. They can offer affordability if you are eligible and meet the requirements but can be costly with their high deductibles if you do not read up on the downfalls. 

That said, catastrophic health insurance fills a specific need for many Americans, and it’s worth considering for a range of unpredictable health scenarios.

So What is a Catastrophic Health Insurance Plan?

Health insurance is a necessity of life, but it can be costly, and each plan offers something unique, both reasons why insurance companies offer a wide range of options for you to choose from. 

One such option is a catastrophic health insurance plan. Catastrophic health insurance plans may be the right choice for you if you are looking for an affordable way to get insurance and protect yourself from worst-case scenarios. Worst-case scenarios could include accidents or unforeseeable and sudden illnesses that you need a one-time, costly treatment. 

This plan offers affordable monthly premiums, so you pay less month-to-month, but they have high deductibles for out-of-pocket healthcare expenses you may incur suddenly.

It covers many of the same preventative care items than any other insurance plans cover under the Affordable Care Act (ACA). Still, some specific qualifications allow you to enroll based on your circumstances, age, and overall health. 

The Cost

The cost can either sway you to enroll or deter you, depending on what your financial needs are at the moment. 

If you find yourself looking for a low-cost monthly premium, this type of plan may benefit you. If you find yourself with high monthly medical expenses and don’t want a high deductible, this may not be the plan for you right now. 

The average cost of a catastrophic health insurance plan in 2020 is $195, significantly less than other health insurance plans available. A big reason many people consider this over other insurance plan options. However, everyone entering into a catastrophic health insurance plan should note that the deductible can be $8,150 compared with the average plan’s $2,500 deductible for single coverage. The high deductible and the eligibility requirements may keep some from enrolling with this insurance plan. 

Two things to keep in mind when looking into catastrophic health insurance plans are:

  1. Do you meet the qualifications? 
  2. And will this plan cover everything you need? 

Below, we have laid out in detail who qualifies for this type of insurance plan and what it covers to determine whether this is the best plan for you. 

What Does It Cover? 

A catastrophic health insurance plan covers all of the same essential medical benefits of other plans under the ACA, including the following: 

  • Ambulance services
  • Emergency services
  • Hospitalization
  • Pregnancy
  • Mental health services
  • Prescription drugs
  • Rehabilitation services
  • Preventative and wellness
  • Pediatric services

In addition to the above, it also covers up to three primary care visits per year before you meet your deductible. Everything else not listed is covered after you meet your deductible, which, as noted above, can be very high. If you feel you need more medical coverage than this plan has to offer, it may not be the right one for you. 

Or suppose your medical expenses (i.e., prescriptions, treatments, doctor visits, or specialists) exceed what you can pay out-of-pocket monthly until you meet the deductible of the catastrophic health insurance plan; this may not be the right plan for you. You will also need to determine if you qualify for this plan before you can enroll. 

Who Qualifies? 

So who qualifies? Even if you decide, a catastrophic health insurance plan is the right fit for you; not everyone can enroll; you have to meet certain criteria. 

Do you meet the following criteria to enroll: 

  • You must be under 30 years of age
  • And you must qualify for a hardship exemption or affordability exemption based on the marketplace or your job-based insurance being unaffordable?

Hardship Exemptions Include

  • You are homeless 
  • Your utilities were almost shut off/ the utility company sent a shut-off notice
  • You have been evicted or foreclosed on 
  • You have suffered from and are a victim of domestic abuse
  • There has recently been a death in the family 
  • Your expenses have increased because you have taken on caring for a sick, disabled, or aging family member 
  • A natural disaster such as a flood or fire (natural or human-caused) has caused significant damage to your property
  • You filed for bankruptcy 
  • You have a significant medical debt you cannot pay 
  • You did not qualify for Medicaid because your state didn’t expand Medicaid eligibility under ACA

The Age Requirement: 

  • If you are over the age of 30, you do not qualify. 
  • If you are under the age of 30 and meet at least one of the above-stated criteria, keep reading. 

The thinking behind the catastrophic health insurance plan’s criteria is that most people under the age of 30 will or should not need a great deal of health or medical care and therefore do not need to spend a lot monthly on an insurance plan. Also, suppose you find yourself in one of the above situations; you may be hit hard financially and need assistance, which can offer financially while still providing you with necessary preventative healthcare. 

This plan is a safety net if someone who meets these criteria should need medical attention for some unforeseeable reason. 

What Are the Pros and Cons? 

If you meet the criteria above and are still considering a catastrophic health insurance plan, you should also review the pros and cons and ask yourself a few questions before enrolling. If the list of cons listed below harms your health and what you have to pay for, this plan may not be the way to go. But if you qualify, and you do not have pre-existing conditions or high monthly medical expenses, this could save you money, offer you the coverage you need, and be the right plan for you.

Pros: 

  • It is a less expensive option compared to other health care plans 
  • If you are a relatively healthy person with little-to-no prescriptions each month or monthly medical expenses, you could save money overall  
  • This insurance plan covers all of the same essential medical benefits other insurance plans under ACA cover
  • It can help if you find yourself in a financial setback momentarily, such as the death of a family member or a natural disaster 

Cons: 

  • It has a very high deductible
  • There are restrictions on eligibility 
  • It does not help if you have a pre-existing condition or high monthly healthcare expenses 

What Should You Consider Before Signing Up?

You should consider what kind of healthcare and insurance you will need in the future. If you are a generally healthy person who takes care of yourself and is looking to have coverage but save some money, this may be the right option for you. 

If you have pre-existing health conditions or do not take very good care of yourself with diet and exercise, or need medical help often, this may not be the right choice in coverage for you even if it saves you some money in the short term. 

Questions to Ask Before You Sign Up

If you’re seriously considering signing up for a catastrophic health insurance plan, these are the questions you should ask yourself before enrolling:

  • Are you under the age of 30? 
  • Are you generally healthy without a lot of monthly medical expenses? 
  • Have you suffered a hardship such as a death in the family, domestic abuse, or homelessness? 
  • Can you not afford your job-based insurance? 
  • If you were in an accident or became suddenly sick, would you be able to afford the high deductible?

If the answer to these questions is yes, then a catastrophic health insurance plan may be the right one for you. 

Whatever insurance plan you decide to choose for yourself or your loved ones, please research so you know upfront what coverage you are getting — or not. Learn what the qualifications are, how much it will cost you both short term and long term, and whether it will meet all of your medical and budgetary needs? The last thing you want to do is find yourself with an insurance plan, even if it’s just for a year, that does not match your medical needs. 

1 thought on “What Are Catastrophic Health Insurance Plans?”

  1. Catastrophic health insurance has its benefits, but like you said, its importance is going to vary from person to person. Those that are over a certain age and have certain family medical histories may wish to inquire.

    Reply

Leave a Comment